Labour's KiwiBuild scheme announced at the party's conference last weekend aims to provide an additional 100,000 houses over 10 years. Photo / Getty Images

The previous Labour Government bequeathed the country KiwiSaver, Kiwibank and KiwiRail. The next one proposes to establish "KiwiBuild", a construction programme that could help many young couples afford their first home. The scheme announced at the party's conference last weekend aims to provide an additional 100,000 houses over 10 years. Labour believes they could be built at an average cost of less than $300,000 and sold for around that price.

It would start the programme with $1.5 billion for the initial round of construction and use the sales to finance the next round. It proposes to borrow some of the initial outlay by issuing "housing affordability bonds" and to call the expenditure capital investment that would not add to the Budget's current account deficit.

It sounds so simple it raises the question why the present Government has not done it, or the previous Government for that matter, since house prices were escalating far ahead of income growth during its time.

The reason large scale construction has not been adopted is that it is not simple and not without risk to the economy.

It assumes that first-home seekers will want the sort of dwellings Labour proposes to build. More importantly, buyers would need confidence that others will want the homes so that their resale value would be maintained. Agents report that young home-seekers today aspire to higher standards than their parents did.

Labour's houses would be small and basic, some of them apartments, but efficiently heated and fully insulated. Two-thirds of those built in the first five years would be in Auckland, where land zoned for new development on the periphery is mostly in the southwest and northwest.

It is safe to assume the style of houses and their integration with an established community would be better than the previous state housing developments on the Auckland periphery and more like the compact units on small sites at Hobsonville, where the present Government rediscovered an interest in state-house building on the eve of Labour's conference last weekend.

The 500-600 Housing Corporation units at Hobsonville will comprise about 20 per cent of the development on the former air base and would be put on the market at prices ranging from $400,000 to $485,000, without public subsidy.

Labour's scheme is much more ambitious, but National's revival of the Hobsonville project - once called "economic vandalism" by the local MP, John Key - is an admission that house prices are not coming back within reach of modest income-earners of their own accord. The property market in Auckland suffered a slump in volume rather than values and has not lost its attraction to investors - particularly immigrant investment as the Business Herald reported yesterday.

Young couples on modest incomes looking to buy their first home are bidding at auctions against immigrants who are bringing wealth into New Zealand and finding few other secure investments here. Labour's commitment to a capital gains tax should reduce the attraction of residential property investment to them and reduce prices somewhat. But the party believes there would still be a demand for many more houses at the lower end of the market.

If Labour is wrong, its project would divert a great deal of the country's building industry into activity of little value and the economy would suffer. But if it is right, many young first-home seekers would reap the benefit. For the moment, the party has a concrete policy to clarify its political character and offer voters something distinctive at the election two years from now.